Global steel demand to grow 10.7% on growing Chinese appetite

Global steel demand will grow 10.7 per cent in 2010, faster than expected six months ago, on increasing demand from China and other emerging economies, the World Steel Association (WSA) said.

The Brussels-based think-tank projected apparent steel demand to rise to 1,241 million tonnes (mt) in 2010 and expand by 5.3 per cent in 2011 to a record 1,306 mt, after having witnessed a contraction of 6.7 per cent in 2009. “The resilience of the emerging economies, especially China, has been the critical factor enabling the earlier-than-expected recovery of world steel demand,” WSA said.

WSA represents 180 steel producers, who make for 85 per cent of the global steel output.

The recovery in demand will be universal, with regions hardest hit by demand slump during the crisis days last year likely to see more than 10 per cent growth in apparent demand.

Chinese steel demand is predicted to grow 6.7 per cent in 2010, after a blistering 24.8 per cent rise in 2009. “The pace of steel economic growth and steel production seen in the first quarter of 2010 suggests that apparent steel use (in China) could be even higher than this forecast,” WSA said.

European Union (EU) economies, which saw a 35.2 per cent decline in apparent steel use, are expected to see a demand increase of 13.7 per cent in 2010. EU’s demand will continue to grow in 2011 when more real demand will drive growth.

Japan will have a temporary respite in 2010, with steel demand expected to grow 10.3 per cent, compared to a fall of 31.7 per cent in 2009. In 2011, its steel demand is expected to stagnate (with a demand decline of 0.2 per cent) due to weakening of its major steel-using sectors, the association said.

The gloomy demand outlook in Asia’s second biggest economy has pushed its steel makers to look out for greener pastures such as India, where steel demand is forecast to grow 13.9 per cent in 2010 and 13.7 per cent in 2011. In recent months, a number of Japanese companies have signed accords with Indian steel companies, offering to share their technology for making high-end products and jointly sell products here. These relationships may be a run-up to an equity partnership, company officials said.